Food for thought - will bond market turmoil force another tariff pivot? During the "Liberation Day" sell-off in April 2025, a sudden spike in borrowing costs was soon followed by President Trump granting a 90-day suspension on many new tariffs. His admission at the time that the bond market was getting "a little queasy" suggests that market pressure can influence policy.

Tapping out?  Consumers alone can’t keep Canada’s economy going

Hot off the data presses this morning, Canadians kept spending in June. The volume of stuff purchased at retail outlets increased by 1.5%—everything from cars to clothing. This reinforces the strong bounce back in the economy in the second quarter.

But there are cracks, with the advance reading for July showing a pullback in retail values of 0.8%. We have long questioned how much longer the consumer can keep the Canadian economy afloat amid high inflation, choppy job growth (yes, jobs have picked up, but it’s very recent), and high household debt. So our broken record keeps playing: with consumers under pressure, Canada will need to get the investment and export engine revved up to drive economic growth.

In Alberta, retail sales fell in June on lower gasoline sales. Despite the dip, the province continues to lead all provinces in retail growth so far in 2026. Consumer spending is one of the factors pushing Alberta’s overall growth ahead of other provinces this year—aided by persistent population gains and stronger job growth. But, as in the rest of Canada, we see these gains slowing. More on this next week.  

On the Map - Alberta cities emerge as global players in tech talent

Last year, ATB Economics, led by Miranda Mantey (currently with ATB Ventures), did a deep dive into the emergence of the tech sector in Alberta. Our report measured how much it had grown (a lot), and the reasons why.

This week brought more evidence that supports the findings of our earlier report. In CBRE’s 2026 Scoring Tech Talent report, Calgary ranked #15 overall in tech talent rating and #1 in tech talent growth for the third consecutive year. Edmonton placed #42 overall among North American markets. The report highlighted Canadian cities' operational cost advantages relative to U.S. markets.

Missing productivity puzzle piece - Canada’s scaling problem

Is your experience with economists that they will agree on a problem, but then debate endlessly about how to solve it?

Productivity is a classic example. The problem in Canada is clear—it’s a big issue. I don’t know any economists who don’t think it is a problem.

But when it comes to solutions, you’ll hear everything from increasing competition, to tax reform, to knocking down interprovincial trade barriers, to building trade infrastructure, to boosting R&D and so on.

One issue I’m convinced is real based on conversations with industry leaders and Carol’s recent Twenty-Four is Canada’s scaling challenge.

The idea is that we have great ideas and promising start-ups, but we struggle to scale (that is, commercialize and develop products) here in Canada. Early-stage Canadian companies are sold abroad, with other countries reaping the productivity rewards.

A new study by the Council of Canadian Innovators does a deep dive into the issue. Interviewing founders of Canadian companies acquired by foreign companies, the study finds the following barriers in Canada: lack of risk appetite, lack of domestic demand, fragmentation, and insufficient talent and infrastructure.

The report proposes aligning public and private capital with commercialization timelines, leveraging strategic public procurement, streamlining government programs, and expanding access to scale-stage talent, infrastructure, and growth capital.

There you have it. A problem and a few potential solutions.

Interesting Fact: Why have diamond prices collapsed?

“Diamonds are forever,” the old marketing slogan goes—but it seems that the era of natural diamond dominance is coming to an end. The diamond market has seemingly reached its lowest point this century, with prices dropping over 40% over the last five years. After decades of scarcity and steady appreciation, what has caused a repricing of this scale?

The biggest factor in the collapse of the price of diamonds is lab-grown diamonds that have flooded the market over the last decade. Factories in China and India have ramped up production of synthesized stones that resemble the chemical properties of natural diamonds, yet cost 60% to 90% less.

The fallout is already hitting Canada's Northwest Territories. Plunging prices, compounded by U.S. tariffs, recently forced the premature closure of two of the territory's three major diamond mines.

Chart of the Week: Thank you seniors! For preventing the collapse in Canadian labour force participation rates

In 2011, the oldest of the baby boomers—the giant demographic cohort born between 1946 and 1965—turned 65 (the typical retirement age). I remember talking about how this was going to lead to massive disruption—a giant wave of retirees exiting the labour market, creating worker shortages.

One of the reasons this doomsday scenario didn’t come to fruition is that older Canadians aged 50+ significantly increased their participation rates (the share of population working or looking for work) as shown in our Chart of the Week. The other reason is that immigration kept adding younger workers.

But we can’t be complacent. There are limits to how much seniors can keep increasing their part rates to offset aging, and immigration is re-normalizing at lower levels. Further, what happens if we really ‘build baby build’ in Canada?

In an upcoming ATB Economics report, we will explore in detail what it means when the baby boomers are no longer in the workforce. Stay tuned!